Energy suppliers are adapting to profound transformations in the energy landscape. These shifts are driving changes in their business models, structured around five key axes:
- Enhancing Commercial Offerings
- Adjusting Governance and Organisational Models
- Evolving Risk Profiles
- Scaling Up Energy-as-a-Service Models
- Converging Energy Supply and Energy Services
1. Enhancing Commercial Offerings
To support corporate clients in decarbonising their electricity supply, new options are As part of decarbonising their electricity supply, new options are available to corporate clients. In addition to direct or indirect procurement from the markets, they can purchase guarantees of origin, enter into direct contracts with producers (via corporate Power Purchase Agreements – cPPAs), or self-consume electricity generated by assets installed on their premises.
To effectively support clients in exploring these options, suppliers must enhance their business model with new capabilities:
- Decarbonisation consulting: What is the optimal decarbonisation strategy based on ambition, geographies, and risk tolerance?
- Legal or accounting support: What are the inherent risks of PPA contracts, and what mechanisms can mitigate them? What capacity is there to derecognise long-term commitments?
2. Adjusting Governance and Organisational Models
Suppliers are increasingly taking on the role of integrators, combining these various sources of supply into the client’s portfolio. Governance and organisation will need to adapt to prevent the client from bearing the complexity of interfacing with producers, aggregators, and balancing responsible parties. Additionally, internal competition between traditional supply activities and new models must be avoided.
3. Evolving Risk Profiles
Initially limited to large consumers, procurement through PPAs is gradually becoming accessible to smaller consumers, either by aggregating multiple clients into a single contract or through suppliers acting as retail marketers of a PPA contract for which they are the counterparty.
These developments are changing the risk profile of suppliers, who may, in some cases, not fully pass on the terms of their procurement (such as duration or volume) to their end clients.
4. Scaling Up Energy-as-a-Service Models
Faced with the dual imperative of energy supply cost competitiveness and decarbonisation, businesses are confronted with multiple complex solutions, many of which require investments in new energy efficiency and production equipment. To address a lack of resources for financing these investments, some service companies offer third-party financing solutions alongside the design, installation, and operation of such equipment, effectively transforming capital expenditure into operating expenses.
This model has historically been applied to large gas boilers for industrial and major commercial clients. Today, it is being extended to on-site electricity production equipment (such as rooftop solar installations, solar carports, or even microgrids enabling clients to achieve a degree of energy autonomy) as well as to decarbonised heat production systems (including biomass or SRF boilers, industrial heat pumps, geothermal systems, solar thermal solutions, and potentially in the future, small nuclear reactors used for heat or cogeneration).
Under these contracts, the electricity or heat supply is based on a pricing formula that includes a fixed component (a financial lease plus operation and maintenance costs) and a variable component for supplementary supply (such as the electricity required to power a heat pump).
5. Converging Energy Supply and Energy Services
Finally, some of these assets installed on client sites are designed to be optimised on energy markets. This is the case for batteries, which enable clients to arbitrage wholesale market price variations, demand response solutions that allow for controlled reductions in site electricity consumption, and electric boilers, which can produce heat using electricity as an alternative to gas boilers depending on the relative price levels of electricity and gas.
In the medium term, industrial clients may also adopt thermal batteries, which store heat generated with electricity during periods of low electricity prices and release it based on consumption patterns.
Looking Ahead to 2025, E-CUBE will closely monitor the implications of these trends, focusing on:
- For suppliers: Adapting business models, offerings, and commercial organisations.
- For clients: Adjusting procurement strategies and managing associated risks.
E-CUBE has developed strong expertise in Energy supply through its recent projects and the experience of its consultants. We would be delighted to discuss these market perspectives and opportunities with you. Feel free to contact our experts below to arrange a discussion on the topic.
